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Class 12AccountancyReconstitution - Admission of a PartnerGoodwill AccountingHard
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The super profit is ₹36,000 and the normal rate of return is 12%. What will be the firm’s goodwill under the capitalization of super profit method?

Answer and explanation

Correct answer: ₹3,00,000

Under the capitalization of super profit method, goodwill = Super Profit ÷ Normal Rate of Return. Therefore, goodwill = ₹36,000 ÷ 12% = ₹36,000 ÷ 0.12 = ₹3,00,000. Option B incorrectly results from multiplying the super profit by 12. In the exam, convert the percentage rate into decimal form before dividing.

Related tags

Goodwill AccountingCapitalization Of Super ProfitNormal Rate Of ReturnAdmission Of A PartnerReconstitution Admission Of A PartnerAccountancyClass 12 Mcq
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10 more MCQs
  1. 1A and B have a sacrificing ratio of 2:1. A new partner brings goodwill of ₹30,000. How much of the goodwill will A receive?
  2. 2New partner C could not bring his goodwill share of ₹20,000. The sacrificing ratio of A and B is 1:1. How much will be credited to A?
  3. 3At the admission of a new partner, old goodwill appearing in the books is written off among whom?
  4. 4If a new partner privately pays the goodwill premium to the old partners, what happens in the firm’s books?
  5. 5Goodwill is ₹240,000. A new partner is admitted for a 1/8 share. What will be his goodwill premium?
  6. 6A new partner brings ₹72,000 as goodwill in cash. The old partners’ sacrificing ratio is 7:5. How much will the first old partner receive?
  7. 7The purchase price of a business is ₹12,50,000. Its assets are ₹15,00,000 and outside liabilities are ₹4,00,000. What is the purchased goodwill?
  8. 8A and B share profits in (2:3). C is admitted and new ratio is (4:5:3). What is sacrificing ratio?
  9. 9Old goodwill of (₹180000) appears in books. A, B and C share profits in (4:3:2). How much will C be debited on writing it off before admission?
  10. 10If a new partner brings goodwill in cash and an old partner immediately withdraws his share, what sequence appears in the old partner's capital account?
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